The Occupy Wall Street Movement and the controversial Supreme Court decision in Citizens United have combined to bring back to public debate an issue long considered non-controversial: whether private corporations are legal persons. This paper argues that a complete understanding of the debate requires analysis of four distinct approaches to the characterization of the corporate form, including a reassessment of the Supreme Court’s 19th century Santa Clara decision. Liberal and left analysis of the personhood issue has been stymied by the assumption that the debate had long been settled, as suggested in the classic article on the Santa Clara case by the critical legal studies (CLS) figure, legal historian Morton Horwitz. This paper suggests that Horwitz’s analysis, while valuable, has critical flaws including a failure to recognize the impact of law and economics thinking on this topic. Any attempt to reassess personhood must take into account the underlying nature of capitalism, which the paper suggests has been problematic for the CLS school.Diamond concludes that -
Despite the effort of conservative law and economics theorists to deconstruct the corporation out of existence in favor of freely contracting individuals, conservatives in actual seats of political power have continued to act as if the corporation is a real entity deserving of legal protection. Until Citizens United, perhaps the most striking case involving free speech for corporate entities was First National Bank v. Bellotti in 1978, when the southern reactionary Justice Lewis Powell wrote the majority opinion in another 5-4 decision. Powell tried to slide around the question of whether the corporation itself had speech rights by claiming that it was the speech not the entity that was being protected. Powell nonetheless cited Santa Clara for the proposition that the Court had long ago recognized corporations as persons and that simply because the speech in question comes from a corporation does not alter the Constitution’s protection of it under the Fourteenth Amendment. This is no less clever an approach than what Justice Field attempted when he tried to distinguish between the wealthy investors in the Southern Pacific Railroad and the corporation itself. Neither decision really fooled anyone. Powell, of course, had an agenda as ambitious as that of Justice Field. His impact was felt on affirmative action in Bakke as well as in a series of decisions that significantly weakened federal securities laws.
Although it was completely unnecessary to his opinion, Powell, for good measure, reminded the litigants and corporate reformers that there could be no turning back the clock to the era when corporations were “creatures of the State” and thus “have only those rights granted them by the State.” This was also an attempt to dismiss the dissent of Chief Justice William Rehnquist, who made a valiant if lonely attempt to restore what Horwitz might call “old conservatism” to the Court by reviving the artificial entity theory of the corporation, where the business firm is viewed solely as a creation of the state and thus subject to that state’s regulatory authority.
The dissent in Bellotti by Justice White, joined by Justices William Brennan and Thurgood Marshall, was rooted, if unconsciously, in the real entity view that took hold in the Progressive era. White noted that mechanisms inside the corporation had centralized power such that one could no longer find a reliable link between the corporation and the desires of its individual shareholders. The natural person element of the Field aggregation theory had indeed disappeared, even if one wanted to imagine the corporate entity now as a mere “nexus of contracts.” Corporate speech, White argued, is “not fungible with communications emanating from individuals” and thus must be examined carefully for the potential “threat” it poses to the “functioning of free society.” It is precisely this centralization of power in a market economy and its break with any realistic notion of genuine free association that must lie at the center of any attack today on the constitutional rights of corporations rooted in personhood.
For the majority in Citizens United, the case was in essence a replay of Bellotti and they relied on Powell’s opinion to bolster their rejection of the restrictions on speech emanating from corporations. To the majority the social reality of centralized corporate power, standing apart even from shareholders who nominally “own” their corporations, was nonexistent. Justice Kennedy wrote, “All speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech. The First Amendment protects the resulting speech, even if it was enabled by economic transactions with persons or entities who disagree with the speaker’s ideas.” The homeless and the unemployed, in other words, are as free to amass money in the marketplace and to express their views as Exxon, Apple, or, for that matter, the non-profit Gates Foundation. Thus, Anatole France: “The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread.”
It is true, of course, that not all corporations are as wealthy and powerful as Exxon. In fact, most are not, and most will fail and dissolve, using the convenience of corporate personhood to do so. Yet that is precisely the point. Not all corporations are the same and the current view of corporations as persons fails to distinguish among them. For the 99 percent of for profit and nonprofit corporations, constraints such as those examined in Citizens United may make no sense. But when it comes to the 1 percent who dominate the “marketplace of ideas,” it is hard to imagine a genuine democracy without such restraints. What might be considered an economically convenient mechanism can also be used to distort our democratic culture, which has long stood on the basis of recognizing the value of a diversity of views expressed by freely associating individuals. And corporations, as the dissent by John Paul Stevens in Citizens United reminds us, “are not themselves members of ‘We the People’ by whom and for whom our Constitution was established.”
Unfortunately, the dissent avoided explicitly any interest in a coherent theory of the modern corporation to underpin its claim. That weakens the political and legal potential in their opinion. It is precisely the need for a theory that explains the vast inequities of the modern corporate economy that is so great. The Occupy movement has performed a valuable service in putting that debate back on the table for public consideration.